Direction: The following items consist of two statements, Statement I and Statement II. You are to examine these two statements carefully and select the answer to these items using the codes given below. Statement I Dividends can be paid only when there are profits. Statement II Dividends can be paid when there are losses. Codes

• A. Both statements are correct
• B. Both statements are incorrect
• C. Statement I is correct, but Statement II is incorrect
• D. Statement I is incorrect, but Statement II is correct